FUNDAMENTALS of ACCOUNTANCY, BUSINESS

And MANAGEMENT 2
Name of Leaner: _____________________________ Grade Level: ___________
Section: _____________________________ Date: ___________

LEARNING ACTIVITY SHEET

( WEEK 1 )
1. Identify the elements of the SFP and describe each of them:
2. Prepare an Statement of Financial Position (SFP) using the report form and the
account form with proper classification of Items as current and non-current.
Background Information for Learners:
A statement of financial position is commonly used to assess the position of a business in
terms of financial stability and potential risk. A typical statement is likely to include a snapshot
of a business's: assets. liabilities (such as loans, VAT, and Corporation Tax)
Balance Sheet or Statement of Financial Position is one of the five Financial Statements that
report three main important financial information of the entity at the end of the balance sheet
date. These three important information are covering Assets, Liabilities, and Equity.
Assets are classified into two types of assets: Current and Non-Current Assets based on nature
and accounting classification.
Same as assets, Liabilities also separated into two classifications: Current Liabilities and Non-
Current Liabilities.
The Equity section contains the information that records about resources that owners invested
and to be invested into the entity with the recording of gain or loss accumulation.
The balance of equity is affected by an income statement as well as assets and liabilities.
Noted, IFRS now has changed the words to call Balance Sheet to Statement of Financial
Position.
So if your financial statements prepared based on IFRS, then you should use Statement of
Financial Position instead of Balance Sheet.
Learning Competency with Code

1. Identify the elements of the SFP and describe each of them:

2. Prepare an Statement of Financial Position (SFP) using the report form and the
account form with proper classification of Items as current and non-current.
( ABM_FABM12-Ia-b-4 )
Objective
at the end of the lesson, the learners should be able to:
1. Identify the elements of the Statement Position
2. Describe each part of the statement of Financial Position ( SFP )
3. Classify the elements of the SFP into current and non-current items, and
4. Prepare the SFP using report form with proper classification of items as
Current and Non-current.
Rationale

Accounting Equation for Balance Sheet / Statement of Financial Position:

Assets = Liabilities + Equity / Capital

NOTE: Practice Personal Hygiene protocols at all times.

Assets: First Items in the Balance Sheet / Statement of Financial Position
Assets are the resources belonging to the entity. Total assets here will report all types of entity’s
assets. These include current assets and non-current assets. Current asset rank above non-current
assets.
The common examples of assets are land, building, cars, cash in the bank and on hand, inventories,
and account receivable. Any assets that bong to the owners or shareholders do not include here.
In the Balance Sheet, Assets report in the first part before Equity and Liabilities.
Current Assets:
1) Cash and Cash Equivalence:
Report the balance of cash and cash equivalence that being to the entity at the reporting date. It could
be cash on hand, petty cash, cash deposit in the bank or other financial note that equivalence to cash.
Equivalence to cash mean easily convert into cash.
2) Accounts Receivable:
Accounts receivable are the receivable amount by the entity from its customers as the result of credit
sales. This amount is expected to be received in a period of fewer than twelve months from the
reporting date or Balance Sheet date.
If part of receivables is expected to receive over twelve months, then they have to class into long term
assets.
3) Prepaid Expenses:
Prepaid is the amount that the entity pays to its suppliers in advance to secure, thought, services or
products.
For example, the company wants to purchase computers, and because the computers are limited in the
stores, or the computer needs to order from the outside country, the supplier requires the company to
make a certain deposit.
At the time of deposit, the entity does not receive the computer from its supplier yet. Prepaid expenses
are the assets of the entity and they have to records in the balance. They are not expenses yet

4) Inventories:
Inventories here include all kinds of inventories: Raw material, work in process and finish goods. At
the end of the accounting period, the entity usually performs physical count to all inventories and then
qualifying them.
The inventory count is normally accompanied by auditors. In a manufacturing company, Inventories
are the main items in the Balance Sheet. Inventories normally record at selling prices less cost to sell.
5) Due to related parties:
This amount is required to be reported as a result of the accounting standard requirement. Amount due
from related parties are not only required to present in the balance sheet but also need to disclose
properly in the note to financial statements.
This amount results from selling of products or rendering of services to its related parties. For
example, parent company, associate and subsidiary.

Non-Current Assets:
Non-current asses here include both tangible and intangible assets of an entity. Here detail all of them.
1) Tangible Non-Current Assets:
Machinery needs to class and report as non-current assets as the useful life of it is longer than one
year. The machinery is recorded in the Balance Sheet at cost. And then depreciation base on entity
depreciation policies. Once the entity disposes of, the cost and accumulated depreciation related to
machinery need to be removed from fixed assets schedule and Balance Sheet as well.
NOTE: Practice Personal Hygiene protocols at all times.
Equipment: This is the kind of equipment that uses in the entity which has a useful life more than
twelve months period. The same as machinery and other long-term assets, equipment is recorded as
costs.
Leasehold Improvements: this type of assets happens when the entity does not own the building or
office that it is using. The office or building is rent from others, and because of business requirements,
the entity makes an improvement on its. For example, the entity rents an office building. The owner of
the building provides only the building space. All other decoration and room for staff responsible by
the entity. In this case, to make decoration and room, the entity will incur costs and that costs are not
classified as expenses immediately. They treat as assets and depreciate as the expenses over the period
of time in the income statement.
Buildings: Buildings here could be the office building for head office or brand. They are records as
non-current assets and depreciate base on their useful life.
Vehicles: they include cars for use in the company or similar types of vehicles are including here.
Vehicles’ rental experience should not record as fixed assets. The expenses should be recorded in the
income statement.
Long-term notes receivable: This is the same to account receivable that we record in the current
assets. The reason we record here because part of receivables is expected to receive in a period of
more than twelve months.

2) Intangible Non-Current Assets:

Investments:  this is referring to long term investment that expects to be recovered into cash in the
long term or more than twelve months. The kind of investments is like stock or bond something.
Goodwill: This kind of asset happens when the entity purchases the new subsidiary while the net book
value of assets of that subsidiary is less than what the entity offer.
Trademarks: the costs of assets that entity purchase probably from the government or professional
body.
Patent: This is the cost that an entity purchases the right to operate the services or sales of the
products in the country. This usually a year.

Liabilities: Second Item in the SFP

There are two types of liabilities in the Balance Sheet. They are,

1) Short-term liabilities
Short-term liabilities are the liabilities that expected to be paid with a period less than twelve months
from the Balance Sheet date.
Accounts Payable is the amount that the entity owes to its suppliers as the result of purchases
goods, materials, or the rendering of services.
Accrued Expenses: Accrual is almost the same to account payable. But just because you are not
receiving the invoices from your suppliers yet, you can not books what the entity owns as payable.
Unearned Revenue is the type of liabilities, and this is a contrast from the deposit. For example, you
are offering services to your customers, and they pay you in advance. In this case, you have not
provided the services to them yet. In such a case, you have to book as unearned revenue rather than
revenue.
Current Portion of Long-term Debt: this is part of the long term debt. For example, the entity owns
the bank for 10,000, and the loan needs to install on a monthly basis. This these case, you have to
figure out how much is the amount that the entity has to pay within one year. That amount is the
current portion of long term debt.

NOTE: Practice Personal Hygiene protocols at all times.

2) Long-term Liabilities
Here is the sample of long term liabilities.
Mortgage Payable this is the number of mortgage liabilities that expected to be paid longer than
twelve months period, and for that amount that payable less than twelve months, we need to class
them out to current liabilities.
Notes Payable is quite the same as the account payable. These amounts are what we expected to pay
in longer than twelve months periods.
Long-term Loans: is the long term liabilities that expected to pay in a period of more than twelve
months.
Finance Lease is the kind of financing that a company occur that assets by obtaining the finance from
other company or the entity that they are purchasing.

Shareholders’ Equity: Third Items in the SFP

Shareholders’ Equity, Owner’s Equity, or Stockholders Equity are called differently in the Balance
Sheet because of the nature of business.
For a private company, we usually called owner equity because, and for a corporation, we usually call
shareholders or stockholder equity.
The total amount of shareholders’ equity is the leftover amounts from assets and liabilities as well as
from business operations. For example, if the company operating loss, the equity will be reduced
eventually.
There are many sub-components that recording under shareholders’ equity. Those including Common
Stock, Prefer Stock, Retained Earnings, and Accumulated Other Comprehensive Incomes.
All sub-elements that record or class under equity elements are increasing in credit site and decrease in
debit side the same as liabilities element.
1) Common Stock:
Common Stock or Ordinary shares are the same, and this class of shares normally has the voting right.
The ordinary share is recording at par value in the balance sheet under equity sections.
Detail of it could be found in the statement of change in equity and Noted to Financial Statements.
This types of stock represent the ownership of the corporation. If the corporation goes to liquidation,
then the holders of this stock have less priority to get payments than others preferred shareholders or
lenders.
2) Retain Earning or Accumulated Losses/ Profit:
Retain earnings or accumulated losses are recording the equity section of the balance sheet. This is the
accumulation of profits or losses that corporation or entity has earned so far.
The balance of return earning could be reduced once the entity makes dividend payments to its
shareholders or reinvestment.
It is depending on the company’s investment and financial strategy. Retain earning can be calculated
by the accumulation of beginning balance of retained earnings plus net income during the year and
minus dividend payments during the year.
3) Reserve:
It is normally the statutory or standard requirement for the company to make a reservation for a special
occasion that could happen unexpectedly.
Sometimes it is named Capital Reserve. For example, if the corporation is the bank, then the central
banks might require the corporation to have certain amounts of the capital reserve for the liquidations.
4) Dividend:
The dividend is the amount that reduces the total shareholders’ equity. It is what the company pays to
its shareholders and mostly decided by the board at the end of the year. Dividend might report as the
contract to retain earning or some time it is recorded as the net off retain earning.
NOTE: Practice Personal Hygiene protocols at all times.
ACTIVITY 1 (LEARN MORE FROM ME)

I. DIRECTIONS: Identify the following items by Putting a check in the column:

Non- Non-
Current Current Owner’ Incom
No. Account Title Current Current Expense
Assets Liabilities s Equity e
Assets Liabilities
1 Accounts Receivable
2 Building
3 Cash
4 Service fees Income
5 Salaries Payable
6 Delivery truck
7 Supplies Expense
8 Unearned Income
9 Inventories
10 Land
11 Notes Receivable
12 Office supplies
13 Utilities Expense
14 Prepaid expense
15 Rent expense
Accumulated
16
Depreciation
17 Advertising expense
18 Bonds payable
19 JRB, Capital
20 JRB, drawing
21 Trading securities
22 Interest payable
23 Mortgage loans
24 Notes payable
25 Salaries expense

ACTIVITY 2 (WHAT’s NEW)

II. DIRECTIONS: ANSWER THE FOLLOWING:

1. Learning is Fun Company had current assets amounting to P100,000.00. Non-Current Assets for
the year, totaled P76,000.00. How much is the company’s total assets? ________________.
2. Happy Selling Company’s total liabilities amounted P10,000.00. Total Equity had an ending
balance of P20,000.00. How much is total assets? ________________.
3. Happy Selling’s had the following accounts at year end: cash P250,000.00, Accounts payable,
P70,000.00 Prepaid expenses P15,000.00. Compute for the company’s current assets. __________.
4. Happy Selling’s Accounts receivable amounted to P500,000.00, Prepaid expense and unearned
income totaled P30,000.00 and P10,000.00 respectively. Cash balance amounted to P100,000.00
while accounts Payable and inventory totaled P20,000.00 and P10,000.00 respectively. How much
is the company’s Current assets and Current Liabilities? _________________ , _______________.
5. Company’s total Liabilities and Equity amounted to P285,000.00. Total non-current assets ended at
P85,000.00. Cash totaled P50,000.00, Inventory amounted to P100,000.00. Assuming the company
had No other assets, how much is Accounts Receivable? __________________.
6. Total assets amounted to P575,000.00. Total equity amounted to P250,000.00. Accounts payable
amounted to P50,000.00 while unearned income totaled P85,000.00. Assuming there are no other
current liabilities Compute for the company’s non-current liabilities. ____________________.

NOTE: Practice Personal Hygiene protocols at all times.

 7. If assets are P17,000.00 and owner’s equity is P10,000.00, Liabilities are __________________.
8. At the end of the first month of operations for Juana’s Delivery service, the business had the
following Accounts, Accounts receivable, P1,200.00, Prepaid insurance, P500.00, Equipment
P36,200.00 and Maria’s equipment P9,500.00. The current assets for the Juana’s Delivery service
are _________________.
9. At the end of the first month of operations for Juana’s Delivery service, the business had the
following accounts, Accounts receivable, P1,200.00, Prepaid insurance P500.00, Equipment
36,200.00 and cash, P40,650.00. On the same date, Juana owed the following creditors: Nena’s
Supply Company,P12,000.00 (due in 6 months); maria’s Equipment, P9,500.00 (due after 2 years).
Current Liabilities are ______________.
10. If during the year total assets increased by P75,000.00 and total liabilities decreased by P16,000.00.
By how much did owner’s equity increase/decrease? ____________________.

ACTIVITY 3: MORE TO GO WITH ME:

III. DIRECTIONS: Prepare a Statement of Financial Position using the Account form. Use your name as
your business name and the End of the Current year for the Heading.
Cash 5,000.00
Loans payable 77,500.00
Accounts receivable 2,600.00
Supplies 2,300.00
Equipment 17,000.00
Owner’s equity 40,000.00
Accounts payable 22,400.00
Building 113,000.00

RUBRIC

ADVANCE COMPETENT DEVELOPING BEGGINER

- Students got - Students got - Students got - Students got
90% above of 85-89% of the 75-84% of the 74% below
the total items total items. total items. - Students
ACTIVITY - Students shows - Students shows - Students shows shows poor
mastery of the understanding of less understanding
competency the competency understanding of of the
( 20 ) ( 17 ) the competency competency
( 14 ) ( 10 )
1.
2.
3.
4.

NOTE: Practice Personal Hygiene protocols at all times.

REFLECTION:
Complete the statement below.

In this activity, I learned that ____________________________________________________

__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
__________________________________________________________________________________
_________________________________________________________________________________.

REFERENCES:

Lifted from:
FABM 2 textbook ( Josefina L. Beticon, James Christopher D. Domingo,
Fermin Antonio D. Yabut )
Teaching Guide for Senior High School / Wikiaccounting.com

ASSESSMENT: THERE YOU GO WITH ME:

DIRECTIONS: Match the following words with their definition:

a. Assets g. Financial Statement m. Accounts receivable
b. Bonds payable h. Notes Receivable n. Accounting Equation
c. Inventories i. Liabilities o. Property, Plant and Equipment
d. Current Assets j. Investment properties p. Statement of Balance Sheet
e. Cash k. Current Liabilities q. Statement of Financial Position
f. Accounting l. Long-term debt r. Owner’s Equity

______ 1. The process of identifying, measuring, recording and communicating economic information
about Organization or other entity.
______ 2. This statement literally presents a company’s position when it comes to resources its own,
obligations claimed against it and the owner’s residual interest.
______ 3. This statement is like a moving video clip. It tells the performance of the company for a
certain Period of time.
______ 4. It is the resources owned by the company.
______ 5. It includes all currency like notes/bills coins as well as deposits in the bank.
______ 6. It is the obligation payable to another entity.
______ 7. Amounts owed by customers to the entity.
______ 8. Evidence by a promissory note.
______ 9. Includes fixed assets used in the normal operating cycle or production of the business.
______ 10. This are long lived assets not used in production.
______ 11. Entity has no unconditional right to defer settlement for at least twelve months.
______ 12. This are contracts of indebtedness sold to a certain individual.
______ 13. Accounts representing bank loans as a source of financing for the entity.it can be 5-25
years.
______ 14. Assets that can be realized one year after year-end.
______ 15. Assets is equal to Liabilities added to Owner’s Equity

NOTE: Practice Personal Hygiene protocols at all times.

NOTE: Practice Personal Hygiene protocols at all times.